Yes, the chit fund comes under Non-Banking Financial companies (NBFC). The chit funds have been included into the NBFC by RBI under the sub-head of MSNBC (Miscellaneous Non-Banking Company). NBFCs are similar to banks that do the same functions.
Still, there are few differences that can be spotted out.
- An NBFC cannot accept demand deposits
- And, it is not a part of the payment and settlement system
- It cannot issue cheques to its customers too
- In NBFC, DICGC is not available unlike in banks.
Though chit funds have been under NBFC, no specific rules and regulations have been meant for chit funds. As soon as many chit funds enter into the market realm, words like “scam”, “fraudulent cases”, etc have been increased. A special act for chit fund is known as the “Chit Fund Act, 1982”.
So, who will handle the operations under chit funds?
The operations including regulation and registration of the chit funds are handled by the State Government under the rules framed for them.
But, many chit funds companies have been favouring lots of members. Members of the chit funds are saving and borrowing at the same time through chit fund practices. If a company needs to qualify NBFC, it is necessary to register the company under the Companies Act 1956 and RBI act 1934.
Most of the people are not aware of the different operations included in the chit funds. It is necessary to have a glance at the chit fund rules before indulging in a new chit fund scheme.
For more details visit: Chit Fund Software Live Demo or contact us at toll free: 1800-200-1766 / 7397723052.
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